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5 Easy Strategies to Manage Your Investments

From DIY to human advisers to robots, choose your best approach


If you’re lucky, by the time you’re in your 50s or 60s, you’ve amassed a retirement fund to tide you through the next few decades. So you now might be seeking ways to simplify your life and finances. If money and investing aren’t top priorities, there are a few ways to streamline the tasks to manage your investments.

Here are five easy strategies to do it and get on with your life; use the one that’s most suitable for you:

1. DIY Investment Management

The financial management costs of do-it-yourself or DIY investment management are simply the underlying costs of your investment trading, Exchange Traded Fund (ETF) and mutual fund fees. If you invest in low-fee funds and trade infrequently, this will be the most economical investment management approach.

But just because the fees are low, that doesn’t mean you’ll come out on top with the DIY approach.

Wise investment management involves making sure your asset allocation (how you split your portfolio among stocks, bonds and cash) aligns with your risk comfort levels. It also involves regular rebalancing of your assets (ensuring you don’t wind up with more of your portfolio in one type of investment than you’d planned) and keeping track of your transactions for tax reporting.

The easiest DIY strategy might involve using a financial management program such as Quicken or the free Personal Capital online dashboard to track your investments and help with asset allocation. And if you have a moderate-sized portfolio and a decent grasp of basic investment principles, this may be the way to go.

If you will go the DIY route, be sure you understand investment concepts such as asset allocation and rebalancing and that you implement your asset allocation in line with your risk preference. For instance, if you have a low tolerance for risk, you’ll want to have a lower proportion of your portfolio in stocks than if you have a high tolerance. You’ll want to rebalance your investments every year or so to ensure the portfolio has the proper mix you want.

Also, try to minimize the number of investment accounts and holdings, so it’s easier to keep track of what you own. Trade infrequently and be mindful of fund management fees — lean towards lower-fee funds.

2. Free Financial Advice

If you prefer some hand holding and an expert to answer basic investing questions, but don’t want to turn your portfolio over to a Certified Financial Planner, consult the financial advisers at a discount broker.

Schwab, TD Ameritrade, Fidelity and others have financial representatives available for their account holders. Most will have basic finance and investment knowledge and the ability to answer rudimentary questions at no-charge. They can talk you through an asset allocation and suggest some low- fee index funds designed to match the markets. The reps can also help explain how to roll over your 401(k) into an IRA if you want.

When going this route, it’s also important to understand basic investment concepts. Don’t be shy about asking about fees. Just keep in mind that you won’t be getting a full-fledged financial plan.

3. Fee-Only Financial Planners With Limited Visits

Fee-only credentialed financial professionals charging an hourly amount or a fee-for-service run the gamut — rom full-fledged money managers to providers who offer a la carte investment and financial management services.

If your financial situation is in place, but you want a second pair of eyes to review it, you might benefit from a fee-only financial planner. This licensed professional can review your portfolio and provide recommendations. Or, if you prefer, you can pay for a complete financial plan that considers your tax, estate planning and other money concerns.

Before hiring a fee-only financial planner, figure out what you’ll need from him or her; research local professionals, including using the Finra.com Brokercheck and learn what the planner will charge.

4. Money Managers: Complete Investment and Financial Management

If you prefer to turn over your finances to a pro, you might be best off with a financial or investment manager. You can expect the financial manager not only to be the quarterback for your investments but possibly help with tax and estate planning. Think seriously about whether you want to allow the adviser to trade securities on your behalf.

The initial set-up with a money manager is cumbersome, since you’ll allow access to your accounts. There might be tax consequences as well, if the manager’s plan involves selling some of your assets and replacing them with others. Once the transition is complete, you’ll have less hand-on investment management. One caution: it’s always important to monitor your financial adviser.

If you’ll use a money manager, understand the investment management fees in advance. Generally, you’ll be charged a percentage of assets under management from 0.50 percent to 1.75 percent.

Research him or her through the Finra.com Brokercheck. Also, ask for a sample of the account management documents the company provides as well as the adviser’s investment philosophy.

Finally, make sure the adviser is a fiduciary, putting your needs ahead of his or hers.

5. Robo-Advisers — Purely Digital or Hybrid

A lower-cost option for financial management has recently exploded onto the investment landscape. The robo-adviser is an automated investment manager who creates your investment portfolio in line with your goals, timeline and risk comfort levels. Then. the digital money manager rebalances those assets for you and may provide a host of additional investment related services.

Robo-advisers aren’t unidimensional. For instance, there are several robo investment advisers who also offer access to human financial advisers. Other differentiating features among these automated financial advisers include: investing style; tax-loss harvesting services; types of investments offered and the ability to invest in individual stocks.

Robo-advisory fees range from zero for Schwab Intelligent Portfolios and Wisebanyan on up to 0.89 percent, for the Personal Capital Advisor Services. SigFig even manages your investments in your existing investment brokerage account.

Before signing up with a robo-adviser, be sure to understand the firm’s fees and services. Also, decide whether you want a human adviser or are comfortable with a totally digital experience. Consider, too, whether you’d like to invest with a robo-adviser who is part of a large financial organization such as Ally Invest Managed Portfolios or FidelityGo.

Finally, even if there’s no human involved, you still need to monitor your robo-adviser.

Barbara Friedberg
By Barbara Friedberg
Barbara Friedberg is a former investment manager, author of Invest and Beat the Pros — Create and Manage a Successful Investment Portfolio; Personal Finance: An Encyclopedia of Modern Money Management and How to Get Rich Without Winning the Lottery. She is a former university instructor and owner of RoboAdvisorPros.com and BarbaraFriedbergPersonalFinance.com. Follow her on Twitter.

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